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CHAPTER – II AUDIT OF TRANSACTIONS

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CHAPTER – II AUDIT OF TRANSACTIONS
CHAPTER – II
AUDIT OF TRANSACTIONS
Embezzlements/Losses/non-recovery of dues
Public Works Department
2.1
Non-recovery of supervision charges
Non-recovery of supervision charges for works executed on behalf of Northern
Railways resulted in loss of Rs. 8.28 crore.
J&K Public Works Account Code provides for the Public Works Divisions to recover
cost of establishment and tools and plant at 7½ per cent and ½ per cent, respectively, as
supervision charges on works costing Rs. five lakh and above, not financed out of the
Consolidated Fund of the State, unless there are special orders of the Government to the
contrary. The percentage charges are also to be levied on the cost of land acquired as part
of the cost of such works.
Construction of approach roads to the 15 newly constructed Railway Stations on the
Qazigund-Baramulla section was entrusted (September 2007) by the Northern Railways
to the State PWD at an estimated cost of Rs. 177.26 crore. The Executive Engineer,
Truck Terminal Division, Srinagar, who was assigned the job, incurred an expenditure of
Rs. 103.51 crore (land acquisition: Rs. 62.53 crore and expenditure on works: Rs. 40.98
crore) till March 2009.
Audit scrutiny (October 2008) showed that the Department, in contravention of the rules,
had not made any provision for supervision charges in the detailed project reports (DPRs)
which resulted in non-recovery of Rs. 8.28 crore (cost of establishment: Rs. 7.76 crore
and tools and plant charges: Rs. 51.75 lakh) from the Northern Railways, resulting in loss
to the State to that extent.
The Executive Engineer stated (October 2008/May 2009) that the division had charged
three per cent contingency charges in the DPRs. The reply is not correct as the charges
levied were for testing, quality control, work charged contingencies, etc. forming part of
the overall project cost and not supervision charges.
The matter was referred to Government/Department in June 2009; reply had not been
received (October 2009).
Idle investment/blocking of funds/unfruitful expenditure/avoidable expenditure
Agriculture Production Department
2.2
Avoidable payment of escalation charges
Sher-e-Kashmir University of Agricultural Sciences and Technology, Jammu failed
to get the HT line shifted and have the drawings and the key construction material
issued to the contractor in time, resulting in avoidable expenditure of Rs. 1.76 crore.
The Estates Officer, Sher-e-Kashmir University of Agricultural Sciences and
Technology, Jammu issued (September 2003) a letter of intent to a contractor for
Audit Report for the year ended 31 March 2009
construction of veterinary clinic complex including electric and sanitary works at a cost
of Rs. 7.40 crore, for completion in two years. In anticipation of the issuance of formal
orders, the contractor took up (December 2003) execution of the work. The formal order
was, however, issued to the contractor only in October 2004 after a delay of nearly a
year, due to disagreement with the contractor regarding the dates from which the
escalation cost on the work done was to be allowed. As per the clause agreed upon,
escalation was to be allowed to the contractor only for the delayed period, and that too in
case the delay was attributable to the University.
Scrutiny (March 2009) of the records of the University showed that the University
delayed procurement of key construction material like steel, cement, etc. for issuance to
the contractor, shifting the high tension (HT) lines and providing drawings to the
contractor in time, which delayed the completion of the building. The work was
completed by the contractor in January 2007 at a cost of Rs. 9.57 crore after a delay of 17
months. As the delay was on the part of the University, it had to pay Rs. 1.76 crore as
escalation to the contractor as per the stipulation in the contract. The University, while
accepting the audit contention, stated that key material could not be procured due to
paucity of funds and it took time to get the HT lines shifted. It was further stated that the
Architect, who had to supply the drawings during execution of the work, failed to do so.
The reply should be viewed in the light of the fact that the University had enough funds
overall to procure the key material. Also the University should have ensured clearance of
site before taking up construction. The reply of the Department that the drawings had to
be supplied by the Architect does not stand to reason as the drawings are essential
requirement for commencement and smooth progress which the university did not ensure,
causing delay and resulting in escalation in the cost of construction.
Inaction of the Estates Officer of the University to have the drawings and the key
construction material issued to the contractor in time and settle the rates of shifting the
HT line with the Power Development Department resulted in avoidable extra expenditure
of Rs. 1.76 crore.
Health and Medical Education Department
2.3
Wasteful expenditure due to change of Executing Agency
Change of executing agency, engaged for construction of a 300 bedded hospital at
Anantnag resulted in wasteful expenditure of Rs. 21.55 lakh incurred on
drawings/conceptual plan.
The State Government sanctioned (March 2007), engagement of J&K Police Housing
Corporation (JKPHC) as the executing agency for construction of a 300 bedded hospital
at Anantnag at an estimated cost of Rs. 62.53 crore. Health and Medical Education
Department (H&MED) released (March 2007) Rs. five crore to JKPHC through EE,
Roads and Buildings, Truck Terminal Division, Srinagar after deducting Rs. 11.25 lakh
as Income Tax. However, the Chief Minister, in a review meeting (13 June 2007),
decided to change the executing agency from JKPHC to the Jammu and Kashmir Projects
Construction Corporation (JKPCC). The minutes of the review meeting were not,
however, available with the Department. In absence thereof, audit was not in a position to
assess the justification for change in the executing agency.
76
Chapter-II Audit of Transactions
Audit scrutiny (October 2008/February 2009) showed that the decision regarding change
of executing agency was conveyed belatedly (September 2007) and by the time the
decision had been conveyed, the JKPHC had spent Rs. 21.55 lakh towards fee of a
consultant engaged (16 June 2007) by it for providing architectural/conceptual designs. In
compliance with the decision taken in the review meeting, JKPHC was requested to
refund the money advanced to it, which the latter complied with, after deducting an
amount of Rs. 21.55 lakh spent by it on drawings etc. The drawings were also not handed
over to JKPCC on the ground that these were the property of JKPHC. As a result, JKPCC
engaged three agencies1 for providing drawings and Rs. 13.68 lakh had been paid to them
as of July 2009. The likelihood of using these drawings for any work is remote as the
requirements differ from work to work. The construction was in progress as of July 2009.
Delay in intimating the decision relating to change of the executing agency to JKPHC
and also non-utilisation of the conceptual designs, thus, resulted in wasteful expenditure
of Rs. 21.55 lakh.
The matter was referred to Government/Department in June 2009; reply had not been
received (October 2009).
Housing and Urban Development Department
(Srinagar Municipal Corporation)
2.4
Improper contract management
The department did not invoke the contract clause after abandonment of work by
the contractors and not resorting to re-tendering of the works resulted in idling of
expenditure of Rs. 3.43 crore
To re-locate vegetable vendors and enhance the financial resources of Srinagar Municipal
Corporation, administrative approval was accorded (June 2001) by the Housing and
Urban Development Department for construction of a shopping complex with 10 two
storied blocks comprising 296 shops at a cost of Rs. 4.31 crore, to be raised by the
Corporation under self-financing scheme. 316 vegetable vendors were to be
accommodated by way of allotment of one shop to two vendors on payment of a
premium of Rs. 1.23 lakh each and the remaining shops were to be auctioned. Allotment
orders for construction of 10 blocks were issued (November 2001: 08 blocks and August
2002: 02 blocks) to various contractors at a cost of Rs. 4.91 crore for completion within
three and four months.
Audit scrutiny showed (July 2006) that the work on nine blocks was taken up during
2001-04 whereas the work on one block was not taken up by the contractor. After
executing 43 to 91 per cent of works on nine blocks (value of work executed: Rs. 3.43
crore), and after receiving the full payment of Rs. 3.43 crore, the contractors abandoned
the works between 2003 and 2006 demanding escalation of rates. The works have since
been lying unattended (September 2009). The Municipal Corporation neither invoked the
contract clause, which provided for penal action, nor re-tendered the balance works. It
was also seen that the Corporation had surprisingly released (2002-05) Rs. 3.43 crore-100
1
M/s Archigroup Architects, New Delhi: Rs. 10.08 lakh; M/s Structural Consultant, Srinagar: Rs. 2 lakh;
M/s Creations Architects, Srinagar: Rs. 1.60 lakh
77
Audit Report for the year ended 31 March 2009
per cent payments for value of work done before stoppage to the contractors in violation
of the contract. The balance work had not been taken up as of March 2009.
The Executive Engineer, Left River Works Division of the Corporation informed (April
2009) that the matter had been referred to higher authorities for a decision. However, no
reasons for non-initiation of action against the contractors and delay in re-tendering were
offered.
Thus, inaction on part of the Corporation has resulted in idling of expenditure of
Rs. 3.43 crore besides, likely increase in the cost of the project on account of cost
escalation on re-tendering the balance works. The questionable action of the Corporation
in releasing full payment to contractors who had abandoned the works needs to be
investigated. Also, deterioration of the building structure constructed till stoppage can not
be ruled out due to passage of time, without proper care and maintenance.
The matter was referred to Government in July 2009; reply had not been received
(October 2009).
Industries and Commerce Department
2.5
Avoidable interest payment
Lack of clear and timely decision on land compensation resulted in avoidable
expenditure of Rs. 1.58 crore as interest.
For acquisition of about 1000 kanals2 of land required for establishment of Industrial
Estate at Ompora, Budgam the Collector, Land Acquisition, Budgam in his tentative
award (October 1992) had fixed the rates of compensation to land owners for two types
of land, viz. Baghi Khushki and Baghi Maidani at Rs. 75,000 and Rs. 65,000 per kanal
respectively and referred the rates (July 1996) to the Government for approval. While
approving the rates (April 1997), the Government scaled down the land compensation
rates to Rs. 40,000 and Rs. 35,000 per kanal for Baghi Khushki and Baghi Maidani land,
respectively, without any recorded justification. The payments to the land owners were
made (April 1997) in accordance with the lower rates determined by the Government.
The land owners, not satisfied with the rates fixed by the Government, received the
payment under protest and approached the court of law.
While defending the case in the court, the Department was not able to give plausible
reasons for scaling down the rates. The District Judge, Budgam accordingly decided (20
November 2000) that the petitioners were entitled to compensation at the rates of
Rs. 75,000 and Rs. 65,000 for Baghi Khushki and Baghi Maidani, respectively, with
interest at the rate of six per cent for the enhanced amount from 20 November 2000 to
September 2008.
The Industries Department approached the High court in May 2001 which upheld (June
2008), the judgement given by the lower court. On its direction, the Department paid land
compensation (Rs. 3.85 crore) at enhanced rates3 and an interest of Rs. 1.58 crore thereon
in terms of the court judgement.
2
3
Baghi Maidani: 297 kanals, 10.5 marlas and Baghi Khushki; 702 kanals and 9 marlas.
Rs. 75,000 for Baghi Khushki and Rs. 65,000 for Baghi Maidani
78
Chapter-II Audit of Transactions
The matter was referred to the Government/Department in July 2009. The Director,
Industries and Commerce stated (August 2009) that all the levels of the Revenue
Department from Collector to the Administrative Department were responsible for the
extra payment to the landowners, which had to be paid by the Industries and Commerce
Department for no fault on its part. The Government endorsed the reply of the Director.
Power Development Department
2.6
Delay in completion of transmission line due to improper planning
Improper planning of the Department resulted in idle expenditure of Rs. 16.86
crore and non-completion of transmission line for 27 years.
In order to provide an additional strong and dependable link to ensure availability of
power to Jammu city and adjoining areas, the Executive Engineer (EE), Transmission
Line Construction Division-I, Jammu had proposed (January 1980) construction of 50
Km long 220 KV Single Circuit Gladni-Udhampur line, at an estimated cost of
Rs. 2.92 crore, for completion in two years. The work was taken up for execution in
November 1982. After laying 133 foundations and erecting 22 towers upto 1987-88, at a
cost of Rs. 2.76 crore, further execution remained suspended upto 1994-95 due to
non-supply of tower material by the contractor. The contractor could supply only
25 per cent of the ordered quantity upto 1988-89. The matter regarding non-supply of the
material by the contractor was referred to an Arbitrator who issued (November 1993) an
award which is pending before the High Court.
Due to extremely meager funding during 1989-95, the Department could procure material
worth only Rs. 16.64 lakh. With a further allotment of Rs. 1.21 crore received during
1995-97, against the revised cost of Rs. 7.16 crore, the Department erected four towers,
executed protection works to some (75 per cent) tower foundations and also procured line
material. The delay in completion of the project resulted in damage to 16 tower
foundations and also large scale encroachments on the right of way of the line
necessitating revision in cost to Rs. 12.16 crore (September 2000) and then to
Rs. 17.56 crore (November 2002).
After incurring a further expenditure of Rs. 12.72 crore from the funds received between
1999-2005, the Department executed works relating to laying of 164 foundations,
erection of 161 towers and stringing of 38.40 Kms conductor. No funds were allotted by
the Government during subsequent years and only in 2007-08, the Government released
Rs. 20 lakh, which the Department used for procurement of material.
For execution of the balance work (laying of one tower foundation, erecting of four
towers and stringing/restringing of 43 Kms of conductor including 4.63 Kms stolen
conductor), the project was revised to Rs. 20.75 crore which had not been approved as of
June 2009. During the 27 years that the project has remained under execution, conductor
of 4.635 Kms valued at Rs. 11.36 lakh had been stolen. Also Rs. 21.92 lakh was spent on
recasting of 16 damaged tower foundations.
The Department stated (November 2008) that a project report had been submitted to the
techno-economic committee for accord of technical sanction and the pending works
would be completed in six months provided funds were made available and added that it
was difficult for the Department to make fool-proof arrangements to avoid thefts as the
79
Audit Report for the year ended 31 March 2009
line was passing through tough terrain and forest area. The reply of the Department
should be viewed in the light of the fact that the Department did not ensure regular supply
of ordered quantity of material to erect the required number of towers with the result that
the line could not be energized and the line already laid had become prone to thefts.
Thus, the project progressed by fits and starts and is still far from completion even after
incurring an expenditure of Rs. 16.86 crore (nearly six times the original cost). There has
also been an avoidable expenditure of Rs. 33.28 lakh on recasting damaged tower
foundations and restringing of stolen conductor. Non-completion of the project in 24
years renders the very necessity of the transmission line questionable. Any more delays in
the completion of the line is fraught with risk of thefts of conductor already stringed as
admitted by the Department itself, which would further delay the completion and also
escalation in cost.
The matter was referred to Government/Department in July 2009; reply had not been
received (October 2009).
2.7
Poor Planning
The Department took up construction of the Sub-station without taking into
consideration the meteorological report and advice of the Geologist resulting in
wasteful expenditure of Rs. 68.93 lakh.
To provide independent, reliable and uninterrupted power supply to BEACON, Defence
and other installations at Jawahar Tunnel, the Chief Engineer, Systems and Operation
Wing, Kashmir proposed (October 2003) construction of a 12.5/15 MVA 132/33 Grid
Sub-station at an estimated cost of Rs. 2.67 crore to be completed by June 2004. The
work, proposed to be taken up at the North portal of the tunnel, was later on taken up at
the South portal, as the original site selected for the purpose was not found stable by the
Geologist who conducted the investigation. The Geologist advised (December 2003)
designing the protection walls in such a way that the wall, which was close to steep
slopes could bear the thrust/push generated by the snow and debris during heavy
snowfall. The Scientist, Snow and Avalanche Study Establishment (SASE), Chandigarh,
also opined (February 2004) that there was no noticeable difference in the meteorological
parameters of North and South portal.
Scrutiny (January 2009) of the records of the Executive Engineer (EE), Grid Construction
Division, Srinagar showed that the construction work at South portal was taken up
(March 2004) for execution without carrying out protection works advised by the
Geologist. While construction was in progress, it was extensively damaged (February
2005) due to snowfall and avalanche. The site was abandoned (March 2005) and a new
site at Tethar (Banihal Town) was selected where the Sub-station with an enhanced
capacity is proposed to be constructed. Out of the amount of Rs. 1.40 crore spent on the
work at the South portal, material/equipment valued at Rs. 71.05 lakh was available with
the Department for utilisation on the newly proposed site. The EE’s justification (June
2009) that the work was taken up on the South portal on the basis of the Meteorological
report did not take into account the fact that the opinion of the Scientist (SASE) and the
Geologist, underscoring the need for undertaking protection works before taking up the
execution, had been overlooked.
80
Chapter-II Audit of Transactions
The decision of the Department to construct the Sub-station at South portal without
taking cognizance of expert advice resulted in wasteful expenditure of Rs. 68.93 lakh.
The matter was referred to Government/Department in July 2009; reply had not been
received (October 2009).
2.8
Avoidable extra expenditure and undue benefit to the contractor
Non-recovery of avoidable extra expenditure of Rs. 86 lakh from defaulting
contractors is tantamount to a direct loss for the Department.
On the requisition of Chief Engineer, Electric Maintenance & Rural Electrification (CE,
EM & RE) Wing Jammu, the CE, Procurement & Material Management Wing (CE,
P&MM), Jammu placed orders (November 2007) for supply of 7,518 steel tubular (ST)
poles of different sizes4 with three local firms (Firm A5: 5994, Firm B6: 762 and Firm C7:
762 poles). The contract stipulated that in case of failure to deliver full or part of the
supply, the purchaser would have the right to make purchase from other sources at the
risk and cost of the defaulting suppliers.
Scrutiny (June 2009) of the records of the EE, Electric Central Store Division, Jammu
showed that the firms A and B supplied (December 2007 to March 2008) only 3,247 and
444 poles against the ordered quantity, while firm ‘C’ had not supplied any material. This
left 3,827 poles8 (order value of Rs. 2.80 crore) out of the ordered quantity unsupplied.
To meet the requirements, the Department procured (July 2008 to December 2008) a
lesser quantity of 3,252 poles9 (order value: Rs. 2.03 crore as per supply orders placed
upon the defaulting firms) from other sources at a cost of Rs. 2.89 crore out of the
undelivered quantity, thereby incurring an avoidable extra cost of Rs. 86 lakh10. It was
seen in audit that the Department, apart from forfeiture of the security deposits (Rs. five
thousand each) of firms ‘B’ and ‘C’, had not initiated any action against the defaulting
firms to recover the cost of the risk purchases in accordance with the terms of the supply.
Non-recovery of extra expenditure of Rs. 86 lakh from defaulting contractors tantamount
to a direct loss for the Department and extending of undue benefits to contractors.
The matter was referred to Government/Department in September 2009; reply had not
been received (October 2009).
2.9
Inadmissible payment of HRA and CCA
Failure of the Department to adhere to rules resulted in excess payment of HRA and
CCA amounting to Rs. 24.46 lakh.
As per rules, a Government servant whose place of posting falls within the qualifying
limits of a city shall be eligible for both House Rent Allowance (HRA) and City
4
5
6
7
8
9
10
8mt: 3,550 poles, 9mt: 1,800 poles, 11mt: 1,177 poles and 13mt: 1,041 poles
M/S SICOP, Jammu: 8mt: 2,662 poles, 9mt: 1,512 poles, 11mt: 945 poles and 13mt: 875 poles
M/S Trikuta Steel Industries, Jammu: 8mt: 444 poles, 9mt: 144 poles, 11mt: 91 poles and 13mt: 83 poles
M/S AAR GEE Industries, Jammu: 8mt: 444 poles, 9mt: 144 poles, 11mt: 91 poles and 13mt: 83 poles
Firm A: 8mt: 1,400 poles, 9mt: 915 poles, 11mt: 32 poles and 13mt: 400 poles (Total: 2,747 poles),
Firm B: 8mt: nil, 9mt: 144 poles, 11mt: 91 poles and 13mt: 83 poles (Total: 318 poles), Firm C: 8mt: 444
poles, 9mt: 144 poles, 11mt: 91 poles and 13mt: 83 poles (Total: 762 poles)
8mt: 1,844 poles, 9mt: 1,203 poles, 11mt: 201 poles and 13mt: four poles
Includes Rs. 45 lakh paid as escalation
81
Audit Report for the year ended 31 March 2009
Compensatory Allowance (CCA) at higher rates prescribed for classified cities, whereas
in the rest of the cases the Government servant shall be eligible to HRA and CCA at
lower rates.
Scrutiny of the records (February/March 2009) of Executive Engineer, Electric
Maintenance and Rural Electrification (EM & RE) Division-II, Jammu revealed that
HRA and CCA aggregating Rs. 24.46 lakh11 were irregularly drawn at higher rates
admissible for classified localities and paid (April 2007 to February 2009) to 195
employees12 posted outside the qualifying limits of Jammu city. The Department
intimated (April 2009) that the HRA and CCA being paid had been stopped (March
2009). The EE intimated (November 2009) that Rs. 4.70 lakh had been recovered from
the concerned employees.
The Department did not adhere to the extant rules which resulted in excess payment of
HRA and CCA amounting to Rs. 24.46 lakh.
The matter was referred to Government/Department in June 2009; reply had not been
received (October 2009).
Public Health Engineering Department
2.10
Avoidable extra expenditure
Injudicious action of the Department resulted in avoidable extra expenditure of
Rs. 1.50 crore on purchase of pipes.
As per the Industrial Policy (2004), a price preference up to 15 per cent can be allowed to
Small Scale Industrial (SSI) Units of the State vis-à-vis the rates quoted by other
suppliers. The Executive Engineer (EE), Public Health Engineering, Mechanical and
Procurement Division, Srinagar had invited tenders (April 2005) for supply of Galvanised
Mild Steel (GMS) tubes for the year 2005-06. As per the terms and conditions of the NIT,
rates finally approved were to remain valid from June 2005 to May 2006 or till the time
the rate contract (RC) was awarded by the Director General of Supplies and Disposals
(DGS&D), whichever was earlier, after which the lower of the two rates would be
applicable. It also envisaged that in the event of failure of the successful tenderer to
execute the supply order, the Department would, without prejudice to any other remedy,
recover the extra cost, if any, involved in arranging the material through other agency and
the defaulting contractor would also not be eligible to bid for any contract in future.
Scrutiny (April 2008) of the records showed that on the basis of tenders (May 2005), the
EE found the rates of two local SSI units13 to be the lowest which worked out to
Rs. 2.97 crore each after allowing the price preference of eight per cent. The rates were
accepted by the Small Scale Industrial (SSI) units. While the supply orders to the two
units were being processed, the Director General, Supplies and Distribution (DGS&D)
issued (December 2005) the rate contract for the year specifying therein the rates to be
allowed to the suppliers for various items. On the basis of the rate contract, supply orders
11
12
13
Sub-Division Bishnah: Rs. 10.99 lakh (HRA: Rs. 10.30 lakh; CCA: Rs. 0.69 lakh) and SubDivision, Miran Sahib (R.S.Pura): Rs. 13.47 lakh (HRA: Rs. 12.62 lakh; CCA: Rs. 0.85 lakh)
(Bishnah: 87 and Miran Sahib: 108)
M/S Kashmir Tubes, Jammu and M/S Samrat Ferro Alloys Private Ltd. Jammu
82
Chapter-II Audit of Transactions
were issued (April 2006) by the Chief Engineer, Kashmir to the two suppliers at a rate of
Rs. 2.83 crore each. The suppliers, however, refused to execute the supply orders due to
variance with the rates offered by them.
The Department, instead of exploring the option of issuing the supply order in favour of
the second lowest tenderer (quoted rate: Rs. 2.74 crore), re-tendered (May 2006) the
items along with the requirements for the subsequent year. In contravention of the terms
and conditions of the earlier supply orders, the Departmental Purchase Committee
selected the same suppliers, as a result of which the Chief Engineer placed the supply
order for Rs. 5.85 crore each (which included cost of GMS tubes earlier ordered Rs. 3.72 crore) on the same suppliers who refused to supply at rates offered. As a result,
the material ordered (April 2006) and not supplied by the suppliers earlier was purchased
by the Department at a higher rate, thereby incurring extra cost of Rs. 1.50 crore. The
CE/EE stated (April 2008/May 2009) that non-execution of earlier supply orders upset
the Departmental yearly plans and imposition of penalty against the SSI units has been
taken up with the Administrative Department.
Injudicious action of the Department in not accepting the rates quoted by the second
lowest tenderer or those approved prior to declaration of DGS&D rates resulted in
avoidable extra expenditure of Rs. 1.50 crore on purchase of pipes.
The matter was referred to Government in June 2009; reply had not been received
(October 2009).
2.11
Unfruitful expenditure due to non-completion of drinking water scheme
Taking up allied works without first ensuring the development of source and failure
of the Department in resolving dispute resulted in unfruitful expenditure of
Rs. 6.86 crore.
For augmenting safe drinking water to the inhabitants of Kupwara Town and its adjoining
areas, the Executive Engineer (EE), Public Health Engineering Division, Kupwara took
up (August 2004) construction of Regional Water Supply Scheme under Accelerated
Urban Water Supply Programme at an estimated cost of Rs. 7.33 crore. The scheme,
envisaged to cover a projected population of 39,605 people was to be completed within
two working seasons. Development of existing source (nallah), construction of a
treatment plant, a service reservoir and an office building, besides laying of distribution
system were the main components of the scheme.
Scrutiny (June 2008) of the records of the Division revealed that without ensuring the
development of water source, the Department took up (April 2004) allied works for
execution. After incurring an expenditure of Rs. 6.86 crore14 (March 2008) on completion
of 61 per cent of works, the execution was stopped (December 2006) by the district
administration due to objections raised by local farmers, apprehending its adverse impact
on irrigation in the area. A committee constituted (December 2006) to look into the
grievances of the local farmers had not settled the issue as of July 2009 though it had
been in touch with the local farmers. Despite a ban on execution of further works, the
14
Laying of distribution system :Rs. 5.32 crore; Pre-settling tank: Rs. 12.14 lakh; Construction of service
reservoir: Rs. 19.40 lakh; office building and land acquisition Rs. 37.88 lakh; Others: Rs. 85 lakh
83
Audit Report for the year ended 31 March 2009
Department spent Rs. 95.01 lakh from January 2006 to March 2008 on acquisition of land
and construction of the Divisional Office.
The EE stated (July 2008/July 2009) that steps were being taken to complete the scheme
and that there was close contact with the district administration to lift the ban.
Taking up allied works without ensuring development of the source in the first instance
and not resolving the dispute for more than two years subsequently has resulted in
unfruitful expenditure of Rs. 6.86 crore, besides depriving the inhabitants of the area of
the intended benefits.
The matter was referred to Government/Department in June 2009; reply had not been
received (October 2009).
Irrigation and Flood Control Department
2.12
Non-completion of an irrigation project
Failure to get clear title of a piece of land in favour of the Department before taking
up execution of the work resulted in non-completion of irrigation project on which
Rs. 75.16 lakh has been incurred.
To provide irrigation facilities to about 155 hectares of agricultural land of four villages
of Tehsil Reasi, the Executive Engineer (EE), Mahore Irrigation Division, Dharmari took
up (September 2002) construction of three Kms Panasa Canal, under NABARD loan
assistance, at an estimated cost of Rs. 79.33 lakh for completion in three years.
Scrutiny (July 2008) of records of the EE showed that the work was started (December
2003) on simple affidavits of the land-owners for use of land, coming under the canal
alignment, free of cost. There was no recorded attempt by the Department to obtain title
to the land required for the canal. After an amount of Rs. 75.16 lakh15 had been spent on
construction of 2,691 Mtrs of the canal16, further execution had to be stopped (April
2007) due to dispute with a land owner over non-payment of compensation for the land
coming under the canal alignment at RD 1526 to 1,660 Mtrs. It was also seen that despite
refusal of the land owner to part with the piece of land, the Department had spent
Rs. 21.63 lakh on execution of the work between June 2004 and March 2007. The matter
regarding that particular stretch of land had also not been resolved as of May 2009. It
may be noted here that the Department had done nothing to obtain title to land for the
canal for over five years.
On this being pointed out, the EE stated (July 2008 and May 2009) that the matter had
been taken up with the Collector, Land Acquisition and the case was under process.
The action of the EE in taking up the work for execution without ensuring transfer of land
in favour of the Department resulted in non-completion of the irrigation project, targetted
to irrigate 155 hectares of land in four villages, thereby, depriving the targetted
beneficiaries of irrigation and rendering the investment of Rs. 75.16 lakh unfruitful.
The matter was referred to the Government/Department in June 2009; reply had not been
received (October 2009).
15
16
Includes past liability of Rs. 1.17 lakh cleared during March 2009
On achieving physical progress of 90 per cent
84
Chapter-II Audit of Transactions
Public Works Department
2.13
Unfruitful expenditure due to non-completion of renovation work
Unplanned and unauthorised execution of works without adhering to the laid down
procedure rendered the expenditure of Rs. 24.90 lakh unfruitful besides avoidable
expenditure of Rs. 33.62 lakh as rent.
To provide a suitable office accommodation to the State Human Rights Commission
(SHRC), the State Government had decided (March 2001) to renovate/repair the old
Muhafiz Khana building in Srinagar at an estimated cost17 of Rs. 18.35 lakh. The work
was proposed to be completed within two months.
Audit scrutiny (November 2006, January 2009) of the records of the Executive Engineer
(EE), R&B Division II, Srinagar showed that in anticipation of a formal allotment order,
the work for dismantling of ground floor, including its reconstruction and remodeling,
was taken up for execution by a contractor in August 2001. The work was subsequently
allotted (June 2002) by the Assistant Executive Engineer (AEE), at a cost of Rs. 13.19
lakh, to the selected contractor without following the system of competitive tendering.
After executing the allotted work, the contractor was allowed to execute the work of
raising the first floor also without formal order of the competent authority. No formal
allotment had been made for the work and the contractor was paid Rs. 14.54 lakh which
included the payments for work relating to ground floor. As no further payment was
made to the contractor for the work done in first floor, the contactor stopped the work and
approached the court for release of payment. Audit scrutiny showed that an amount of
Rs. 24.90 lakh18, which included electrical works amounting to Rs. 3.32 lakh, had been
spent on the work ending March 2009. The case had not been settled as of April 2009.
Meanwhile the office of the SHRC continued to be housed in a private building for which
an amount of Rs. 33.62 lakh had been paid as rent from October 2001 to July 2008.
The EE stated (November 2008) that a revised proposal, estimating a cost of Rs. 88.20
lakh, had been submitted (May 2007) to higher authorities and its approval was awaited
(April 2009). The EE also stated that the allotment was made without resorting to
tendering in view of urgency shown by the higher authorities. The reply should be
viewed in the light of the fact that no authority is vested with the power to award work
without following the laid down procedure of awarding the work to the lowest tenderer
after obtaining competitive quotes whatsoever is the urgency. Further, the fact that the
Department had not restarted the work even after a lapse of five years clearly indicates
the lack of urgency in the matter.
Thus, unplanned and unauthorised execution of work without adhering to the laid down
procedure has resulted in unfruitful expenditure of Rs. 24.90 lakh besides an avoidable
expenditure of Rs. 33.62 lakh as rent.
The matter was referred to Government/Department in June 2009; reply had not been
received (October 2009).
17
18
Ground floor area: 3,546 sqft; Rs. 500/- per sqft including cost of toilets and electrification.
Includes Rs. 10.36 lakh passed for payment in March 2005 but kept in deposit by the department as
the case was sub-judice
85
Audit Report for the year ended 31 March 2009
2.14
Idle investment due to change in specification of a bridge
Incorrect assessment of the Department regarding type of the bridge to be
constructed resulted in idle investment of Rs. 27.29 lakh.
For providing connectivity to eight19 villages, the Executive Engineer (EE), R & B
Division, Udhampur had proposed (August 1997) construction of a 48 metre span foot
suspension bridge over river Ujh at Sai Merry at an estimated cost of Rs. 32.66 lakh.
Without obtaining administrative approval and technical sanction, the EE took up
(October 1997) construction of left side abutment and anchor block of the bridge and got
it completed through a contractor at a cost of Rs. 11.99 lakh.
It was seen in audit (December 2008) that after the construction of the Abutment and
Anchor Block had been completed, the specification of the bridge was changed
(November 2002) from that of foot suspension to a motorable one due to demands of the
local population. The change in specifications, interalia, required construction of the
right side abutments as per the revised drawings and strengthening of the abutment
already constructed, which necessitated revision of the project cost to Rs. 68.69 lakh.
These works were got completed (July 2006) through another agency at a cost of
Rs. 15.30 lakh which included Rs. 2.25 lakh released in 2006-07 and 2008-09 which had
been utilized for clearance of the past liability. The work, suspended in July 2006, is yet
(May 2009) to be resumed due to non-release of funds in the subsequent years.
The EE stated (December 2008, May 2009) that the work is proposed to be taken up
under NABARD and would be completed after release of funds from the agency. The
reply should be viewed in the light of the fact that the EE did not ascertain the
requirement of the population of the area being benefited under the scheme before
commencing the work and as a result the specification of the bridge had to be changed.
Thus, wrong assessment of the Department regarding the type of bridge to be constructed
necessitating change in specification of the foot suspension bridge to a motorable one has
resulted in idle investment of Rs. 27.29 lakh besides, the inhabitants of the targeted
villages being deprived of the envisaged benefits.
The matter was referred to Government/Department in September 2009; reply had not
been received (October 2009).
General
2.15
Follow-up on Audit Reports
Non-submission of suo-moto Action Taken Notes
To ensure accountability of the executives to the issues dealt with in various Audit
Reports, the State Government (Finance Department) issued instructions in June 1997 to
the administrative departments to furnish to PAC/COPU, suo-moto Action Taken Notes
(ATNs) on all the audit paragraphs featuring in the Audit Reports irrespective of the fact
that these are taken up for discussion by these Committees or not. These ATNs are to be
submitted to these Committees duly vetted by the Accountant General (AG), within a
19
Bhadwal, Bhagani, Chakal, Majouri, Reshian, Serial, Sia and Sia Merry
86
Chapter-II Audit of Transactions
period of three months from the date of presentation of Audit Reports in the State
Legislature.
It was, however, noticed that none of the Departments had submitted suo-moto ATNs in
respect of their paragraphs/reviews featuring in the Audit Reports for the years 1990-91
to 2007-08.
2.16
Action taken on recommendations of the PAC/COPU
Action Taken Notes, duly vetted by the AG on the observations/recommendations made
by the PAC/COPU in respect of the paragraphs discussed by them are to be furnished to
these
Committees
within
six
months
from
the
date
of
such
observations/recommendations. The PAC/COPU reconstituted (November 1996) after the
expiry of President’s rule in the State decided to skip over the discussion of Audit
Reports prior to the year 1990-91. Out of 825 paragraphs featuring in the Audit Reports
for the years 1990-91 to 2007-08, only 262 paragraphs have been discussed by the
PAC/COPU up to March 2009. Recommendations in respect of 170 paragraphs have
been given by the Committees (PAC/COPU) but ATNs on the recommendations of the
Committees have not been furnished by the Administrative Departments despite the PAG
taking up the matter with the Chairpersons of the two committees and the Chief
Secretary.
2.17
Lack of response to Audit
The Hand Book of Instructions for speedy settlement of Audit observations/Inspection
Reports (IRs), etc., issued by the Government (Finance Department) provides for prompt
response by the executive to the IRs issued by the AG to ensure remedial/rectification
action in compliance with the prescribed rules and procedures and accountability for the
deficiencies, lapses, etc. brought out in the IRs. The Heads of offices and next higher
authorities are required to comply with the observations contained in the IRs and rectify
the defects promptly and report their compliance to the Accountant General.
Fifteen Audit Committee meetings were held during 2008-09 in respect of paragraphs
contained in IRs pertaining to the civil wing, wherein 1,128 transaction audit paragraphs
were discussed and 644 paragraphs were settled.
At the end of March 2009, 6,011 IRs involving 26,924 paragraphs pertaining to the
period 1998-2009 were not settled.
Lack of response to Audit indicated inaction against the defaulting officers, and
facilitated continuation of serious financial irregularities and loss to Government even
after being pointed out in audit.
The Government should look into this matter and revamp the system to ensure proper
response to the audit observations from the departments in a time-bound manner.
87
Fly UP